Business strategy: Ryanair

Appendix 1 - 2
SUMMARY
Through a deepen analysis of Ryanair, the first budget airline in Europe, modelled after the successful USA carrier, Southwest Airlines, the objective of the report is to bring out and discuss the sustainability of Ryanair’s strategy. The report incorporates a brief history and description of Ryanair and its strengths and weaknesses, company’s operation and challenges as a budget airline. The study also looks at the competitive advantage that Ryanair develops to become highly successful in low-cost airline market. The latter part of the case consists of a description of Ryanair’s low-cost strategy, which entails a discussion of the sustainability of the strategy. Having developed an understanding of Ryanair’s situation, recommendations are suggested.
INTRODUCTION
Nearly fifteen years ago, UK-based Ryanair airline shook up European air travel by offering no-frills flights from its Dublin hub at cut-rate fares. Patterned after Southwest Airlines, the leading low-cost airline in the United States (see Appendix 1), European low-cost airline Ryanair was quickly gaining share on the Continent through aggressive pricing and marketing, backed by cost structures that were radically different from those of established carriers. Founded in 1985 in Ireland, now Ryanair has become one of Europe’s most profitable airlines and hottest stocks, and its success at exploiting under-used routes and undercutting the major carriers on price had spawned a generation of imitators.
As the largest and most successful of Europe’s low fare airlines, the company operates short-haul, point-to-point routes between Ireland, the UK and Continental Europe. The company has increased its annual traffic from about 700,000 to over 40 million passengers over the past ten years. It is now a ticket-less airline and all its sales are essentially done over the Internet. For the fiscal year ended March 2006, Ryanair reported revenues of $2,104 million, an increase of 28% on the previous year. Net...

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